3 Keys to Service-Provider Relationships

At Belvedere Neighborhood in Charlottesville, Va., residents have high-speed Internet included with their homeowners’ association dues.

By Susan Knowles, April 16, 2009

When it comes to choosing the entertainment and communications services that will be made available to a given property, how do you know you're making the right choices?

One critical decision many developers, property managers and homeowner association boards are facing is whether to include these services as part of existing fees or to allow residents to select subscription services on their own.

There's no cut and dried answer, but the following factors may be helpful in deciding which option is right for a particular property.

Demographics

When a service provider offers developers an amenity package, developers must take time to review how each of the services will suit a property.

For example, if the majority of the residents are tech-savvy, they won't be happy if they are forced to pay for Internet access with slow download speeds.

Before accepting a service amenity offering, decision-makers should talk to residents and find out what services those residents desire. If the service provider isn't willing (or able) to create an offering that fits the needs of the residents, it's better that they allow individual subscriptions.

According to Sara Flynn, executive director of The Cedars of Chapel Hill community in central North Carolina, her development supplies a fast, reliable Internet connection because that's what its "very technologically savvy" residents desire.

Income/Occupancy Rate

Being able to supply providers with income data and occupancy rates of a community can lend itself to deal-making.

Revenue sharing with content providers can be a good way for developers to boost a property's income. Since services are determined by the property, strong discounts can often be negotiated.

For example, if a property can negotiate a rate of 50 percent off market value with the service provider, the fee for the residents can be 75 percent of market value.

In turn, that additional 25 percent can be used to fulfill other property needs.

"We looked at this as an opportunity to include cable in rent and give them a better service for a cheaper price," says David Lynd of the Lynd Company, a property management group based in Texas.

"Any time you're in a position in life where you're selling something that's better for a lower price, you have a powerful advantage."

Service Provider Quality

Mandatory inclusion of services into rent or HOA fees means taking responsibility for the quality of the services.

If there are problems, the property's decision-makers will take the heat.

Therefore, developers ought to examine providers closely before adding a service amenity. They should talk to the provider's customers to see if they have been satisfied.

They should even call their customer service line to see how responsive they are.